Friday, February 20, 2015

Battle over digital migration

Ghana’s bid to migrate from analogue
to digital terrestrial television (DTT) broadcasting in June, this year,
may suffer a setback, if a lawsuit filed at the Commercial Court in
Accra against it should succeed.

Star Communication Network Technology Company Limited of China has
sued the Ministry of Communications through the Attorney-General over
the abrogation of an April 11, 2012 contract for the supply and
installation of a reliable energy-efficient and cost-effective Digital
Terrestrial Television (DTT) Network Solution.
But the MoC has
denied any wrongdoing and explained that it abrogated the contract after
the plaintiff had made false representations, as well as failed to meet
its part of a contractual arrangement to pre-finance the project and be
reimbursed within a 10-year period.
An affidavit in opposition to
the plaintiff’s motion for interlocutory injunction has stated that the
ministry acted within the confines of the law before abrogating the
contract and for that reason, the plaintiff’s application must be
dismissed.
In addition, the Ghana Independent Broadcasters
Association (GIBA) has joined forces with the Ministry of Communications
and is praying the court not to entertain the suit because any delay in
Ghana’s bid to migrate to DTT would have a negative impact on its
members.
Meanwhile, the Commercial Court in Accra, presided over
by Mr Justice George Kingsley Koomson, will on March 9, 2015 rule on
whether or not to restrain the ministry from recruiting a new contractor
for the project until the final determination of the instant action.

Case of plaintiff

According
to a statement of claim accompanying the writ of summons, the plaintiff
met all contractual obligations but the government delayed in working
on the necessary documents to warrant the Exim Bank of China to release
money for the financing of the project.
It said the MoC was also
required to procure Cabinet and Parliamentary approvals for the
concessional loan, the execution of the loan agreements as well as for
the notification of the supplier of the award but it failed to fulfil
the said conditions apart from the notification of the award.
According
to the statement, the MoC wrote a letter dated November 17, 2014,
intimating the ministry’s intention to disengage itself if the financing
agreement – i.e. the concessional loan, was not received in the next 11
days, that was November 28, 2014.
It said as an assignee of the
contract, all the plaintiff was required to do to assist the grant of
the loan was to facilitate the process of accessing the concessional
loan by using its best efforts, which it had done.
“It was the
duty of the Ministry of Communications to process the said loan
application on schedule and with full knowledge of its obligation that
it obtained all approvals had failed in the discharge of those
obligations.
“However, to the utter surprise of the plaintiff, by a
letter dated January 14, 2015, the Minister of Communications again
wrote to the plaintiff now terminating the agreement dated April 11,
2012, purporting to do so by virtue of Article 41.1 of the General
Conditions of Contract contained therein which stated that the purchaser
could terminate for its convenience,” it said.
It further averred
that to further advance its agenda, the ministry on January 29, 2015
put up an advertisement in the Daily Graphic newspaper “advertising the
project which plaintiff had been contracted to execute under the
agreement dated April 11, 2015 and which was unlawfully terminated by
the minister through no fault of the plaintiff and has by the said
advertisement, evinced a clear intention to award the contract to
another entity”.

Reliefs

The plaintiff is praying the court to declare that the purported termination of the contract was unlawful.
It
is also asking for an order reversing the purported termination of the
said agreement, as well as an order of perpetual injunction to restrain
the ministry and its agents from interfering with the April 11, 2012
contract”.

Ministry’s position

In its affidavit in
opposition, the defendant averred that aside the plaintiff’s obligation
to fully fund the project it also informed the defendant “it was capable
of assisting the government to obtain a concessionary loan facility
from the China Exim Bank, based upon which the contract was awarded
StarTimes Ghana after all due processes have been followed”.
“The
main reason why the contract was awarded to StarTimes Ghana was because
of its proposal to the MoC indicating its capacity to facilitate the
necessary funding for the project through concessionary loan arrangement
from the China Exim Bank,” the affidavit in opposition noted.
It
further explained that because StarTimes Ghana was a local entity and
could not access the concessionary loan for the project, the Ministry of
Finance was not in a position to submit any formal application to China
Exim Bank for a concessionary facility in respect of an agreement
entered into with a locally registered entity.
The affidavit said
thus StartTimes Ghana within three months assigned its rights to Star
Communications Network Technology Company Limited (now plaintiff in the
case) and following from that the Ministry of Finance carried out the
necessary due diligence and formally submitted the application for the
concessionary loan on December 21, 2012.
It said the response from
the China Exim Bank to the Ministry of Finance’s application “came by
way of a letter dated January 27, 2014, months after the ministry had
dispatched the application for the concessionary loan to the China Exim
Bank”.

Back and forth

It said the ministry received
another letter dated June 25, 2014 from the China Exim Bank seeking
further clarifications on Ghana’s application, adding that “contrary to
our understanding and the basis for StarTimes Ghana winning the
contract, it became evident that a lot of information and documentation
was required and the Ministry of Finance had to follow its usual process
to compile, verify and ensure their accuracy before submitting same to
the China Exim Bank”.
The affidavit averred that after formal
trips to China, back and forth correspondence and due diligence carried
out by the defendant, it became abundantly clear that the plaintiff was
not in a position to pre-finance the project.
It said it also
became clear the plaintiff had made false representations with regard to
its claim that it had procured letters of intent from the China Exim
Bank.

GIBA’s Position

Meanwhile, the Ghana Independent
Broadcasters Association (GIBA) has filed an affidavit in opposition to
the motion for interlocutory injunction asking the court not to allow
the plaintiff “to fetter the progress of the digital migration programme
since in any case the court is allowed to grant them damages for the
worth of their work pursuant to the cancellation of the contract”.
“That
as the beneficiaries of the contract, we have reviewed same and
concluded that the contact did not contain any clause restricting the
defendant from terminating the contract but rather a clause that states
that the defendant could terminate the contract at any time for any
reason,” an affidavit in opposition sworn on behalf of GIBA by its
President, Mr Akwasi Agyeman, pointed out.
The affidavit in
opposition said the entire membership of GIBA and the media industry in
Ghana would suffer untold hardship should the project be further
stalled.
According to the affidavit in opposition, Ghana was
required to migrate to DTT by June 2015 per the international agreements
binding the players in the industry.